Some Sage Words From The 4A’s On Advertising Agency Pitching
Here is an interview on advertising agency pitching I did with Tom Finneran, EVP, Agency Management Services at the 4A’s. It’s one of many expert interviews in my book on advertising agency pitching. It comes from the perspective of the 4A’s, its work with hundreds of agencies, and with the ANA – the Association of National Advertisers.
By the way, I am updating the book. Stay tuned. Oh, why update it? Well, let’s just use one newish thing that has revolutionized pitching (to put it mildly) — virtual pitching.
I thought I’d add this interview to my blog for a few reasons. Some to help you and one big one for me.
- Your agency’s pitch batting average will increase if you have a solid, smart, consistent pitch system.
- You will win more pitches if you put yourself in the client’s shoes.
- You should be aware of the 4A’s and ANA agency search guidelines. If fact, share this with the clients you pitch. Here’s a link to an Ad Age article on the guidelines.
- You’ll help me because I want you to buy the book. It’s not because I make a lot of bucks from sales (although sales are robust and it is nice to get money from Amazon.) No, I want you to buy the book because many agencies that read the book, see that I actually know what I am talking about, and turn into my consultancy’s business development clients. Duh coming: Books help make people and even agencies look and sound like experts.
On To The 4A’s Interview That Will Help You Win More Pitches
Warning. This is a long interview. Long as in over 3,000 words. Read it if you want to win more new business.
Tom Finneran: EVP, Agency Management Services – The 4A’s
Tom Finneran leads the 4A’s Agency Management Services team, which provides industry guidance, member consultation, and benchmark information in the areas of new business, agency compensation, agency management, and operations.
Tom’s career includes extensive ad agency and advertiser financial management experience. He was executive Vice president/CFO at Jordan McGrath Case & Partners and Arnold McGrath Worldwide, a unit of Havas. He was also Executive Vice President/COO at Grey’s promotional unit, J. Brown/LMC.
PL: While there’s no one-size-fits-all pitch process, do you think that clients are running more professional pitches today than in the past?
Tom: What we consistently hear is that reviews have become less professional and efficient than in the past. This is important because, to a degree clients have taken in-house some of the review practices that have traditionally been managed by industry consultants who were more adept at running professional pitches.
In terms of the efficiency of reviews, some of the things that are less efficient than they should be are cattle calls. You’ll have clients who are not experienced at doing reviews, and they’ll send information requests to far more agencies than should be included in the initial list.
Some of the other inefficient processes are what I would refer to as RFPs from hell. Here is one example. About a year and a half ago, one of our members called irate about an RFP that had 300 questions. And I said, “You’ve got to be exaggerating. It couldn’t possibly have been 300 questions.” So the person said, “Wait a minute. Let me look at this.” Then she commented, “Okay. You got me, I exaggerated. It’s 293 questions.” So this was an RFP that a client-sourcing group used. The RFP was geared to soliciting responses from ingredient suppliers, research and development firms, and contractors of all types. And woven into the 293 questions were a few marketing-related questions that were kind of like packed in there.
PL: So are you seeing these kinds of issues primarily with larger clients or also medium-sized to smaller clients?
Tom: These tended to be from marketers who did not have dedicated, knowledgeable marketing procurement folks. They were taking people who could source corrugated materials and chemical components and things of that nature.
PL: Is there an agency size factor? Is it affecting your large and small 4A’s members?
Tom: It affects members both small and large.
More 4 A’s on Advertising Agency Pitching
PL: Is that what you currently see as the biggest efficiency problem?
Tom: No. I have a list of efficiency problems I’d like to go through. One is cattle calls. Two is RFPs from hell. Three is the sub-optimal use of RFIs. Too many clients start a review with requests for detailed proposals when, in point of fact, they should be using a streamlined RFI to vet the long list. Get it down to a manageable few. And then start the deeper dive, including an RFP. Going out with an RFP to 10, 12, 15, or God knows how
One is cattle calls. Two is RFPs from hell. Three is the suboptimal use of RFIs.
Two is RFPs from hell. Three is the suboptimal use of RFIs.
Three is the suboptimal use of RFIs.
Too many clients start a review with requests for detailed proposals when, in point of fact, they should be using a streamlined RFI to vet the long list. Get it down to a manageable few. And then start the deeper dive, including an RFP. Going out with an RFP to 10, 12, 15, or God knows how many more is just not an efficient process. So we recommend starting that long list phase with an RFI.
PL: Do you think clients are doing this out of, let’s call it naiveté, or are they sometimes fishing for ideas?
Tom: There are certainly instances of clients conducting a review and fishing for ideas. There’s no question about that.
PL: You and the ANA put together a fairly extensive pitch guidelines document. How are you getting that document into the hands of clients so that hopefully they’ll run better pitches in the future?
Tom: The 4A’s and the ANA have actually collaborated on two documents, and I would view them as two chapters of the same book. A couple of years ago we authored guidelines for agency search. About a year or so after those guidelines were released, we wanted to understand if people were adhering to the guidelines. Are they making a difference, and what are the challenges that are still out there?
The challenges we heard back were sub-optimal use of RFIs, RFPs from hell, and inadequate briefings. So based on that, we again collaborated with the ANA and released just late last year, an agency selection briefing guide that advocates the broader use of RFIs. It describes when an RFI should be used and the advantages of using it. And it talks about the necessity of having a thorough briefing for every submission for review.
One point we have not yet addressed is the importance of having a client management decision-maker involved throughout the process.
Another is that we’re seeing more and more project reviews. So instead of a review for a major AOR or retainer relationship, these are reviews just for a short-term project and clearly the industry needs to do some work on streamlining processes and procedures for project reviews.
I wanted to get back to your specific question of “What are we doing to get the word out?” We introduced the second set of guidance during Advertising Week 2013. We have been communicating through ANA to their members using everything from bulletins to a member webinar, and at the ANA Finance and Procurement Conference.
PL: Are you finding that your member agencies are disseminating this document to their prospective clients as well?
Tom: We are. And it’s to that fact we urge members to proactively utilize these guidelines. So as soon as they hear about a potential review, we are urging our members to send to the marketer these guidelines and to use the document as a trigger to discuss with the marketer how they’re going to conduct their reviews, what they’re really looking for, what the elements of the process will be. Some agencies are better than others at directly asking the marketer to provide any examples of where their process might appear to be varied from the industry guidelines.
By the way, the feedback that the proactive agencies have gotten has been universally positive. It’s because the proactive nature of the agency talking about, “Well how are you going do this?” rather than just saying, “Oh great, there’s going be a review, can I get in?” is viewed as more professional, thoughtful and diligent.
PL: Well I think that’s a great insight. I always thought that ultimately the client is not in the business of torture. The key point I heard in your answer is that savvy agencies recognize that they look more professional when they can help the client be more efficient with their search process.Tom: Exactly right. In terms of getting the word out, Microsoft, which recently announced the conclusion of their agency review, initially contacted Nancy Hill, the President of the 4A’s, and asked about the guidelines that we had on agency searching. That is not an uncommon circumstance where marketers will contact us at an early stage.
PL: Well let me shift this conversation just slightly. I wanted to get your opinion on something that my research into presentations and the whole pitch process revealed. It’s sort of obvious that, to a certain extent, once agencies have gone through the RFI and RFP process there’s a similarity between the agencies. Do you have any insights as to how member agencies are working to separate themselves from the pack? Let’s say during a presentation? How do they do that?
Tom: Actually, one differentiator that is becoming more and more apparent, and is becoming a key-determining factor in agency selection, is cultural compatibility. And that’s borne out, in part, in our work with the ANA on guidance. We added a whole supplement about cultural compatibility. In the review process, agencies that have particularly strong cultures make sure that they are able to engage with the client in ways so the client knows about the agency’s cultural expectations, the agency’s values and beliefs, the way the agency expects to work with clients, and the way the agency expects to be treated. It carries over into the way agencies prepare for and conduct final presentations.
The best example of this is The Richards Group, who will not participate in a review unless, at some point during the process, the client agrees to go to Dallas. That is an ironclad rule, and they will not deviate from it. The reason Stan and the Richards Group picked that stance is that they have certain ways of working and established agency philosophies. They need the client to come to Dallas to meet them in their own space, and understand the way they operate. This attention to cultural compatibility carries through in the way that they conduct themself within a review. And The Richards Group has a pretty admirable new business record.
PL: I’m hearing you say that the right client will respect that kind of a request.
Tom: That’s correct. By the way, I referenced the Richards Group, but I could’ve referenced the Martin Agency. That’s just another example.
PL: Let’s go back quickly to something you said earlier. Are you seeing that clients are using the same process for projects and AOR reviews?
Tom: In too many instances, the process for project reviews is more complicated than is warranted based on the size of the opportunity.
We just did a pilot survey among the 4A’s statistics committee members. About a quarter of them will not pitch for a project. They will work on projects as a way to establish both rapport and the ability to start to work together. But they simply will not pitch for the right to work on a project. They just don’t think that the economics makes sense.
Some of the evolution of this whole project review thing largely comes out of two elements. First is the growth of digital activities and that digital marketing is primarily a project-driven way of working. So while even big digital agencies like 360i or RGA have very significant relationships with very significant clients, their relationships tend to be a litany of projects, one after another or multiple projects going at the same time rather than an AOR retainer situation. Part of the growth of projects is a function of digital, social, and PR experimentation and first of its kind work being done.
The second element is the Great Recession of 2008 – 2010, when clients simply were not in a mode of wanting to commit anything beyond what was absolutely necessary. So clients began to meter out and authorize activities on a shorter leash. Even as the economy has recovered to whatever degree, it’s become a standard pattern.
PL: So what we’ve seen is a behavioral shift?
Tom: In some instances, I’d agree with that, yes.
PL: Do your smaller agencies view projects as an opportunity for them vs. when the majority of pitches were AOR? Does this benefit the smaller more specialized agency?
Tom: Absolutely. If you consider going back 25 or 30 years ago, relationships between the agency and the client tended to be exclusive arrangements in both directions. As clients started to unbundle – everything from unbundling research, to unbundling promotion activities, to unbundling media, and so on – there was also the growth of more specialist firms, whether it be search firms, web development firms, specialists in mobile app development, and so on. Clients now work with far more agencies today than they worked with 25, 30 years ago. And that creates opportunities for specialists. And some of those specialists, quite frankly, can overcome a size deficit by having that deep expertise in a specific niche. It’s definitely created opportunities for smaller organizations.
PL: And your agencies are recognizing that trying to be everything to everybody is not necessarily the best business development case and pitching scenario?
Tom: Well, there are two heads to that coin. Yes, clients are working with more agencies than ever before. But when you ask the clients what their paramount challenges are, one of the top ones is how they integrate all this stuff. So you will see clients go through a process of expanding the number of agencies, and then from time to time, take a step back and say “This is out of control. We have to rationalize some of this, there are too many inefficiencies of having all these agencies. We can’t manage all of this.” So the concept of a lead agency is not over by any means.
PL: So how does a smaller agency protect itself when it’s time for consolidation?
Tom: Well if a small agency has a deep expertise in an area, they may well survive and actually thrive in a consolidation.
PL: An enlightening interview in this book is with the procurement expert Gerry Preece. One of the most revealing statements he made was that when it comes to compensation negotiations, advertising agencies are like babes being led to the slaughter. How do you help your members learn how to negotiate?
Tom: At most sizeable marketers, procurement has taken over the lead responsibilities for negotiating compensation, and you have to recognize they are trained, skilled negotiators. If you send untrained account people into a negotiation with procurement, the agency is going to get the fudge handed to them.
It should be noted that when procurement says things like “This is it. Take it or leave it.”, procurement, most of the time, doesn’t have the authority to say that. They don’t have the authority to make that decision. But if procurement says, “We’d love to work with you, but unfortunate- ly your costs are too high.”, you have to recognize that they’re going to tell you that even if you’re the lowest cost agency. So there are strategies for negotiating that agencies must develop. Part of the strategy is not to let procurement isolate the agency from the marketing and most senior management of the client.
PL: Well having the CMO involved sounds critical. How can you make that happen? How do you get marketing management into the room?
Tom: Well that’s the job for the lead client service director or the head of the agency to make sure that the CMO is not abdicating responsibility. The Great Recession empowered procurement. So CMOs should have evolved to work more collaboratively with their own procurement groups.
PL: So as it often comes down to it, it’s about agencies asking CMOs to participate and for agencies to act proactively. How can they get there?
Tom: The 4A’s have conducted a number of negotiating skills training programs for our members. One of the negotiating skills trainers we work with is Tim Brenton of the Brenton Group. Tim talks about TDQs: Tough Disturbing Questions. And to your point, you can’t negotiate unless you’re prepared to ask tough questions. So when the client provides contractor sort of terms and says it’s non-negotiable, you have to push back and say everything’s negotiable. We don’t accept non-negotiation, and who has authorized you to make that declaration? You know, push back at ‘em.
PL: Interesting. Pushing back is difficult for some “nice” advertising people.
Tom: It’s clearly difficult for an account person who says, “If we lose this business, I don’t have a portfolio to work with.”
PL: I love the idea of asking Tough Disturbing Questions, that’s fantastic, and I think Gerry’s earlier point is you have to be able to come back hard. It is important to note that by the time the client has selected you after a three to four-month process, they’re fully invested in wanting to work with you, and it’s incumbent upon agencies to leverage that.
Tom: Yes. And the fact that they selected you is an indication that whatever it is that you presented, whatever it is that your process is and so on, that’s what they want. The decision is almost never made on money. In survey work we’ve done, money doesn’t even crack the top five or six decision-making criteria.
PL: Here is my last question: What is the one piece of advice that you’d give agencies to help them win more pitches and manage their pitching process?
Tom: Pitch less. My advice is that agencies have to ruthlessly screen opportunities, and stop ambulance chasing. And in point of fact, my recommendation is that agencies make a conscious, strategic decision to reduce their traditional pitch activity by twenty percent.
They should take that money and resource and invest it in developing their own intellectual property that the agency owns and monetizes. And go to market with that intellectual property, license the things that you develop to clients, and develop control of your own intellectual property. If you did that over a three, four or five year period, it would be a significant war chest of investment, and you would have a significantly different model of business development that is much more within the agency’s own control, particularly the pricing of that intellectual property.
PL: Do you have an example of an agency that is building an intellectual property treasure chest?
Tom: Unfortunately no. No, I am not aware of any agency that has specifically adopted the 20% formula. That being said, there are an increasing number of agency experiments with agencies adopting their own I.P.
Schafer Carter Condon developed a beer brand, which they then sold to a beverage company.
Digital agencies like T3 and Sarkissian have independently developed patented software service platforms, which they license to marketers.
Anomaly has developed multiple products including a cosmetics line.
Media agencies have independently invested in software, data and analytics models which are the foundation of agency owned and controlled trading desks.
Agencies are investing sweat equity in the development of social platforms, apps, and content, which they are endeavoring to monetize across multiple platforms.
This function requires a multi-year commitment: it’s not going to happen overnight. The industry has to start to use some of its own creativity and technical know-how when developing its own products and services. Because if you develop your own intellectual property, it stops being a procurement discussion. It’s not “How many hours did you put into this?” It’s not “What do you pay your people, what’s your profit margin, what’s your overhead rate?” And the only way out of that nonsense is to be able to control the intellectual property.